Transport sector part of quicker payment times trend


Dun & Bradstreet sees record low interest rates as fuelling debt flight

Transport sector part of quicker payment times trend
Dun & Bradstreet reckons more firms are cashed up and wanting to pay invoices..

 

The ‘Transportation’ sector has joined most others in the Australian economy in seeing payment times decrease in the past year, a survey shows.

Dun & Bradstreet’s (D&B’s) latest Trade Payments Analysis shows average national invoice payment times economy-wide plummeting from 56 days two years ago to 44 days in the last quarter of calendar 2015.

And of the 13 sectors measured, only ‘Utilities’ saw a rise between the last quarter of 2014 and the last quarter of last year.

In that time, ‘Transportation’ recorded a fall of about five days, from around 47 to about 42.

The result comes on the back of the Reserve Bank’s (RBA's) decision in December to leave the cash rate unchanged at 2 per cent for the seventh consecutive month, while consumer sentiment soared to a 22-month high in November before consolidating in December, according to the Westpac-Melbourne Institute Index of Consumer Sentiment.

The final quarter of 2015 also saw 68 per cent of businesses settling their invoices within 1-30 days, compared to 66 per cent in the third quarter of 2015.

Meanwhile, slightly fewer businesses opted to pay their bills within the 31-61 day period.

"The further fall in the payments times for the business sector shows that firms are not only cashed up, but confident about their financial position," D&B economic advisor Stephen Koukoulas says.

"The record low interest rates set by the RBA are freeing up cash flow and lowering borrowing costs and underpinning a strong performance for corporate Australia."

Koukoulas adds that 94 per cent of firms are making their payments within 60 days, with all sectors other than Utilities recording shorter payment times in the December quarter.

"Despite recent market ructions, there is no pressure from the trade payments data to suggest any need for the RBA to cut interest rates again," he says.

According to the report, 48 per cent of businesses would choose to miss a payment to a trade supplier if they were unable to pay all of their bills.

And 28 per cent of businesses have had a customer or supplier become insolvent or otherwise unable to pay them during the past year, down from 35 per cent in the previous quarter. 

Businesses with between 50 and 199 staff settled their invoices at the fastest average rate of 40.2 days, followed closely by those with between 6 and 19 employees, with an average rate of 40.6 days. 

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